Building a mighty Citadel inside a kingdom

Ines Scotland's is a mining success story, writes Barry FitzGerald

INES Scotland's first brush with fame lasted all of a day back in 1969 when she came first in the under-three category in a Melbourne baby show, despite what the judges described as a "solemn pose".

The cash prize was handy, too, allowing Scotland's immigrant family to move out of their migrant hostel accommodation and into private rental digs.

Ines Scotland, Citadel Resource Group CEO.Credit:Paul Rovere

Scotland is far from solemn nowadays. The pint-sized 43-year-old, born in Newcastle, England, is quick with a smile and a laugh as she recounts her path from baby show winner to foundation chief executive of Collins Street-based mining group Citadel Resources.

The rise of Citadel on the strength of its trailblazing to become the first Western group to secure a mining licence in Saudi Arabia means Scotland's second brush with fame is about due.

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In an industry where women are few and far between, Scotland has quietly become one of Australia's most successful mining executives of either sex; certainly the most successful self-made female mining executive.

She brought Citadel to the market through a backdoor listing in 2007. It has since become a $700 million company, with Scotland holding about 120 million shares (last sale 30¢ a share) and busy planning Citadel's next round of growth.

The lack of women in the mining industry is an issue Scotland thinks about a lot. "Absolutely," she says.

"I don't believe that women have the same opportunities. They do up to middle-management level, but until we have more women at the very senior levels, it will be very hard to push down into an organisation the truly flexible opportunities that women need, and men, for that matter."

Scotland says it is interesting to ponder the question of whether she would be chief executive of Citadel if she had not been a founder of the company.

"So would the board have chosen to put me in this position or would they have chosen a man? I pretty much know what the answer to that would have been, particularly as we are working in Saudi Arabia," Scotland says.

Saudi Arabia is not known for its encouragement of women in the workforce. Of Citadel's 50-strong and growing workforce before becoming a copper/gold producer in the kingdom next year, none are women.

"Women do participate in the workforce, both at the senior and at lower levels. But one of the Saudi government's requirements is that you can't have a mixed workforce," Scotland says.

"It's OK for me as a Western woman. I can go over there and mix with whoever I like, but Saudi women are meant to have separate places of work to men. So we are looking at establishing roles where we can have women separate," she says.

Scotland gets around Saudi Arabia in a business suit, with a buttoned-up shirt. "I actually feel really at home in the Middle East. I've been adopted by a few local Saudi families. So I get to go out to dinner and be like a normal person when I am there."

There is another restriction on doing Western-style business in Saudi Arabia — alcohol is illegal. There are some positives that come from that, according to Scotland, who lived there for 3 years and continues to flit back and forth from Melbourne to oversee the group's project development and exploration programs.

"You feel renewed," Scotland says of the alcohol-free stints in the kingdom. " The whites of your eyes become so white."

Scotland is also thankful that she was in alcohol-free Saudi Arabia when Citadel's big break came on May 22 this year — the day the government granted the mining licence for its $US280 million Jabal Sayid copper/gold project.

"I will never forget that day. If I had been in Australia, it would have been a day I would not remember," Scotland laughs.

Although Scotland calls Melbourne home, her early life and professional career involved constant moves. Her father worked for the federal government as a military attache, specialising in equipment acquisition.

"So we spent a lot of time in Canberra, went to primary school in the US, and high school in the US. All up, there were 10 different schools," Scotland says.

Her first job on leaving university as a bachelor of applied science in chemistry was with Comalco, at its remote Weipa bauxite operation in north Queensland. Then there was a move to the Boyne Island aluminium smelter near Gladstone and, later, the Lihir goldmine in Papua New Guinea, another Rio Tinto associate at the time.

Then it was off to Rio's Kennecott copper operation in Utah — Scotland's personal favourite work experience because, unlike the other operations, it has a major city on its doorstep.

"Working in operations and project development has always been my thing," she says.

Scotland's next move — and the one that eventually led her to Saudi Arabia — was as head of the North American division of Vertex, an engineering services provider to the resource industry.

"We specialised in feasibility studies and operational readiness and we were turnkey process plant operators as well, based in Australia and the US," Scotland says.

"Rather than just sell our own skills, we wanted to manage our own company. And I was actually the project manager, developing a mine and concentrator in Oman in 2003 with Vertex when we heard Saudi was changing its mining laws.

"It was the change in the mining laws that took us there. We knew that Saudi was hugely prospective but was really underexplored. When the mining act was released in January 2005, we were the first to put in applications."

The new mining laws made Saudi Arabia mining-friendly (20 per cent tax, no royalties and full profit repatriation).

"The government has been very open in saying that they want the mining industry to be the next pillar of the economy," Scotland says.

Vertex picked up about 10 copper and gold projects but the game-changer was a joint-venture deal in 2006 with Saudi-owned light engineering group Central Mining Investments (CMCI) on the Jabal Sayid project, originally as a 50:50 joint venture but now on a 70:30 Citadel to CMCI basis.

The partly developed Jabil Sayid is a product of exploration/development work in the 1960s and 1970s by a French geological mission that was a paid explorer to the Saudi government.

Even so, Jabal Sayid is like all modern-day discoveries in the country, in that it was first identified at one of the thousands of ancient mine workings that dot the Arabian (geological) shield in the kingdom's east.

"I was living in Saudi at the time and I was making a lot of Saudi contacts and CMCI came to us and said that they had this Jabal Sayid project but that they were not mining people, that they didn't know what to do with it," Scotland says.

"We were already in Saudi with our other projects. The fact that we were working there and that we had geologists on the ground was why they came to us.

"But we realised that we could not fund the project from the cash flow from our engineering business and so it was in 2007 that we listed on the ASX."

Citadel joined the ASX lists in December 2007 with a market value of about $300 million. Its new board and management controlled about 41 per cent of the share register (now about 9 per cent), reflecting the acquisition of the Vertex subsidiary's holdings in Saudi mineral projects.

Jabal Sayid is 350 kilometres north-east of Jeddah and is very much the flagship project. Commissioning is due to start in late 2011 and planned annual production is 57,000 tonnes of copper (in concentrates with gold credits).

Scotland says the project is very much the starting point. "We are well positioned to become a significant mining house in the Middle East and the northern African region. Jabal Sayid provides us the opportunity to build the business and generate a cash flow.

"We'll be generating cash flow within the next 24 months. That gives us the opportunity, rather than diluting our shareholders, to actually reinvest a portion of that in projects elsewhere in the Middle East/northern African region.

"Already we have a fantastic portfolio of follow-up projects. So we don't have to make acquisitions in order to get there."